CARH’S BROADCAST EMAIL – Legislative Update
1) Congress Considers Third Stimulus to Address COVID-19 Economic Fallout
As CARH members know, the Senate yesterday passed, and President Trump signed into law, H.R. 6201, Families First Coronavirus Response Act, that is intended to address immediate issues surrounding COVID-19. Even before that legislation cleared Capitol Hill, discussions were under way on how to respond to the developing health crisis and economic consequences during this national emergency. Every sector of the economy is being impacted by COVID-19, and it will require significant resources to fight the pandemic itself, and the related economic downturn for millions.
CARH together with other housing groups are urging Congress to come together across aisles and include a variety of housing-related issues in the various legislative proposals currently being drafted. CARH is working to have included the following:
Emergency Rental Assistance
There should be one-time appropriations of $500 million for Rural Development’s (RD) Section 521 Rental Assistance program and a $100 million one-time allocation for preservation. This allocation should be used to assist renters and to move forward RD’s multifamily preservation waiting list, already full of delayed transactions.
The issue for low-income residents is how to pay the tenant portion of their rent, and for more than 72,000 unsubsidized households, how to pay the rent at all. This is not just an issue for residents, but for owners, operators and their employees. Vendors and their workers need to be paid and are often low- or middle-income wage workers. There is no cash flow other than the rents and the tenant paid portion is a key component to keeping the system working.
Financial Mitigation for Property Owners
As indicated above, CARH believes that in order to maintain a stable economy, targeted federal financial government assisted relief should also be provided during this time of crisis and that any disruptions to the normal financial flows, not be disproportionally borne by anyone in the process- renters, property owners, servicers, lenders, or mortgage securitizers. CARH, together with other affordable housing industry groups, have advocated that any measures that provide assistance to renters also provide support to rental property owners. Such assistance would be in the form of mortgage forbearance and other financial obligations (taxes, insurance, etc.) to mitigate the loss of rental income from any gaps in the coverage of rental assistance, a loss of income that could throw the underlying mortgage into default, leading to tax liens being placed or other negative legal actions and ultimately putting the property and its residents at risk of additional disruption.
Housing Credit Modifications
Section 42 of the Internal Revenue Code sets three deadlines for Housing Credit developments to meet: 1) expending at least 10 percent of the anticipated basis within a year of the allocation; 2) placing the buildings in service by the end of the second year after the calendar year of allocation; and 3) placing in service rehabilitation expenditures within 24 months. Under the current circumstances, many Housing Credit projects are in jeopardy as meeting these deadlines requires closing on financing and making steady progress in building. CARH, as part of the ACTION Coalition, is also urging Congress to:
- Amend Section 42 to temporarily extend the placed in service deadline to the end of the third year after the calendar year of allocation for properties that received Housing Credit allocations between December 31, 2016 and January 1, 2022;
- Amend Section 42 to temporarily extend the 10 percent rule to be met within the second year of the allocation for properties that received Housing Credit allocations between December 31, 2016 and January 1, 2022; and
- Amend Section 42 to temporarily extend the rehabilitation expenditures deadline to be met at the close of any 36-month period.
While aforementioned housing recommendations would provide immediate assistance to Housing Credit properties in the development process, Congress should also consider measures to bolster future production and preservation of affordable housing. With federal borrowing rates effectively zeroed out in response to COVID-19’s economic impacts, the 4 percent Housing Credit rate is at an all-time low of 3.12 percent and will likely dip even further next month.
Providing a flat rate would provide parity to the 9 percent Housing Credit rate, for which Congress enacted a minimum rate as part of the response to the 2008 economic collapse in recognition of the critical role of affordable housing in the recovery. In light of the historically and unusually low federal borrowing rates, Congress should similarly stabilize the value of the 4 percent Housing Credit to ensure that sorely needed affordable housing developments are able to move forward. CARH and our ACTION partners urge Congress to enact a minimum 4% Housing Credit rate.
CARH strongly urges all of our members to contact your members of Congress today and ask them to include the affordable rural housing sector in any stimulus bill that is being developed. As with any grassroots efforts it is important that you provide examples of the impact of COVID-19 on your company, employees, residents, and community. Every segment of the economy is being impacted by this pandemic. Congress needs to hear from you today!
To contact your Senators, click here.
To contact your Representatives, click here.
2) Trump Signs H.R. 6201: What Employers Need to Know About the COVID-19 Paid Leave Law
CARH General Counsel, Nixon Peabody, LLP, published this Employment Law Alert providing information to employers about H.R. 6201 and its paid leave provisions.